US Services PMI Slides To Lowest Since January

After a hopeful start to the year - despite the weather, the West Coats ports, and every other excuse - US Services PMI has slipped the last 2 months, back to the lowest since January. At 56.4, below expectations, this is the biggest 2-month drop since December. Input prices edged up to 9-month highs. This is the first YoY drop in the Services PMI since December. As Markit proclaims hopefully, "policymakers will be eager to see if this slower growth trend develops
further over the summer months before risking any tightening of policy."

Commenting on the flash PMI data, Chris Williamson, chief economist at Markit said:

“The US economy looks to have grown at a healthy pace in May, providing further evidence that the rate of expansion has picked up from the weak start to the year. The resilience of domestic demand in particular helped encourage companies to take on extra staff at the fastest rate for almost a year.

“An upturn in business optimism to a six-month high also bodes well for robust growth to be sustained in coming months.

“The survey data put the economy on course to rebound in the second quarter, with GDP rising at an annualised rate of around 3%, with non-farm payroll growth continuing to run around the 200,000 level.

“Such keen hiring and robust economic growth inevitably tips the scales in favour of the Fed hiking rates later this year rather than waiting until 2016.

“However, the rate of expansion remains below the buoyant rates seen throughout much of last year, as slower growth of service activity has been accompanied by a slowdown in the manufacturing sector, which has seen exporters hit by the stronger dollar. Policymakers will be eager to see if this slower growth trend develops further over the summer months before risking any tightening of policy.”

Charts: Bloomberg

Comments

[NoDebt]

Still comfortably over 50.

[silver_stacker]

“The US economy looks to have grown at a healthy pace in May, providing further evidence that the rate of expansion has picked up from the weak start to the year. The resilience of domestic demand in particular helped encourage companies to take on extra staff at the fastest rate for almost a year.

Markit is a paid for government mouthpiece of manipulated data and propaganda...

[Dead Canary]

No it's not. It was created by, and is owned by, all of the major world banks.  It's the bankers own little PR company.

[JoeTurner]

Wait, are we counting hookers and blow in this analysis ?

[nmewn]

And midget tossing & cock fighting. There is huge untapped economic metrics out there to pull all this shit out of the fire just waiting to be added in!

Come on...we can do this!!! ;-)

[q99x2]

Print.

[ajkreider]

This.  I'll take a 56 print forever.

Speaking of the government stats, they overweight large companies - which led the recovery until last year.  The last couple of jobs reports have make it clear that the economy is now driven by small busninesses, which will mostly be helped, not hurt, by the strong dollar.

[nakki]

Surley with the robust growth this country has had over the last 6 years, the idiot savants at the NY fed can raise the fed fund rate to .25%. Not up to .5% because that would probably crush stocks, housing, and cause headwinds for companies that make half their profits abroad. 

Just imagine the horror and carnage that would be unleashed with FED fund rates at 1%. Just imagine the apocalypse that would be brought on if the S&P was trading 1600.

Remember GDP will be up in the first quarter and with any luck (and seasonal, seasonal adjustments) will be running at 5% by the end of the year.